If the film The Graduate were remade today, the word of career advice whispered in Dustin Hoffman's ear might well be "services" instead of "plastics".
Today, we exist in an economy where the services sector is the economy. Services -- everything from fast food to brain surgery -- accounts for about three-quarters of Australia's GDP and an even larger share of employment, with around 8.8 million, or 85 percent, of Australians working in the services sector (according to the Australian Government's Services Report, released in June 2007).
Deloittes research tells us that our best-performing manufacturers generate 50 percent of revenue and profits from services. IBM's rapid revenue growth can be directly attributed to services. And IBM is not alone -- services are fastest growing part of many businesses.
The drivers of growth and innovation in the services sector can be attributed to many things, but particularly these are driven by the deployment of new technology.
In the past decade, 85 percent of all productivity gains in Australia's manufacturing sector and 78 percent of gains in the services sector have come from the application of ICT solutions.
At the Australian Institute of Company Directors conference in Shanghai, which I attended earlier this year, Professor Michael Enright, Director of Enright, Scott and Associates broke down the costs of your average Barbie doll. If a Barbie doll costs $10.00, he argued, then:
Ã¢â‚¬Â¢ Manufacturing parts costs $1.00
Ã¢â‚¬Â¢ Assembly costs 0.35 cents
Ã¢â‚¬Â¢ Logistics costs 0.65 cents
Ã¢â‚¬Â¢ Retail costs $4.00
Ã¢â‚¬Â¢ Brand (such as design etc) costs $4.00
So, we can see that Australia needs to be in the design end of goods and services.